More Building Owners are Exploring New Uses

After COVID struck, Jennifer Luoni, director of operations at Dacon, a Boston-area architecture firm, started getting many calls. Her firm does feasibility studies for developers and building owners of all stripes, including warehouse, flex space and office

The pandemic has boosted some forms of real estate while hurting others. This has forced building owners to take a hard look at their portfolios.

“When COVID struck, a lot of developers that we work with have had to pivot,” Luoni says. “I think a lot of people are really thinking about how they can get the most out of their space.” 

The influx in feasibility study requests isn’t just a product of owners exploring new uses. It’s a result of landlords being more cautious.

“I think people are actually more cautious on what they spend money on,” Luoni says. “I think there’s a hesitancy now.”

A developer might have invested large amounts of money in a project before doing full due diligence in the past. Recently, that has changed. 

“Before, they might have tried a redevelopment and invested $200,000 to make it work,” Luoni says. “Right now, people are trying to be more responsible with their money due to the uncertainty of their business and the future and whether they can lease their building or not.”

These people are now more willing to spend money to test their project’s feasibility before making a significant redevelopment investment.

“They’re thinking that maybe they should spend a little bit of money upfront to understand if a potential investment can work rather than being haphazard about it,” Luoni says. “I think they always should have done that, but COVID has pushed a sense of more responsibility.”

As e-commerce thrives during the pandemic, many building owners are also approaching Dacon about the feasibility of turning their property into a cold storage facility. 

“About 80% of our work has been in manufacturing and distribution over the past years,” Luoni says. “We see a big influx in that.”

Developers are also approaching Dacon about the feasibility of turning abandoned office building sites into storage. Those conversions usually aren’t feasible. 

“But I’ve seen strip malls with old Kmart and Caldor and Bradlee’s locations actually being turned into cold storage,” Luoni says. “They put coolers inside and turn them into storage and distribution facilities.”

Old grocery stores may be the most straightforward conversion to cold storage, Luoni says. “A retail strip center has loading docks in the back because the goods are being brought in,” she says..”They usually have nice, high ceilings. There are a few situations where we have actually raised the roof.”

While cold storage is popular now, things change. With technology and consumer preferences evolving, another type of use could be popular once the pandemic passes.

“I can’t say what’s going to happen with COVID,” Luoni says. “Two years from now, something else could happen to cause another real estate pivot.”